On Wednesday, the IRS ruled that, for tax purposes, bitcoin and other cryptocurrencies are to be treated as property, rather than currency. While this will likely not have too much of an effect on the long-term value of the digital currency, it is a step in the right direction in terms of general acceptance. Having gotten the boring news out of the way, there is allegedly something distinctly more exciting set to be reported later today in the cryptocurrency world. Reports are just starting to emerge that Mt Gox is set to report it has found 670,000 bitcoin, just a matter of days after the company reported it had found 200,000 bitcoin in an old wallet. This would return Mt Gox to solvency, and more importantly, imply that the block chain had scuppered any efforts at theft. This could dramatically improve confidence in bitcoin, and fuel some upside momentum in the short to medium term.
The chart shows the BTC/USD opening the day around 582.000 flat, before declining somewhat to support at 572.968. A short-term correction brought the pair back towards its daily open, but resistance at 580.016 reversed the BTC/USD towards, and eventually to break, aforementioned support. Daily lows followed, and resistance at 571.116 reversed the pair into a sharp climb to daily highs at 585.223, around which price currently resides.
If the fundamental bias is to be believed, look for a break above this level. A close above resistance would offer up an initial target of Tuesday highs at 590.145. Beyond that, look for a close above 600.00 flat to validate a target of March 21 highs at 605.814.
To the downside, look for a break below 581.512 to offer up an initial downside target at 576.531. Beyond that, 572.968 and fresh daily lows on a break below 571.116.
All said, the aforementioned news may not materialize, but if it does, there could be some considerable upside in the BTC/USD before the day’s out.
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